Monetary policy refers to the actions taken by a country’s monetary authority to control money supply and credit conditions in the economy. It plays a key role in maintaining economic stability by influencing inflation, employment levels, and overall growth. Through monetary policy, authorities aim to ensure that prices remain relatively stable so that purchasing power is protected. It also helps smooth economic cycles by supporting activity during slowdowns and restraining excess demand during periods of rapid growth. Effective monetary policy builds confidence among consumers and businesses, encouraging sustainable economic development.